Share-Based Compensation

The Corporation maintains a share-based compensation plan under which it periodically grants share-based awards for a fixed number of shares to certain officers of the Corporation. The fair value of share-based awards is recognized as compensation expense over the requisite service or performance period. Share-based compensation expense related to stock options and restricted stock units totaled $0.6 million during each of the three-month periods ended March 31, 2014 and 2013.

During the three-month period ended March 31, 2014, the Corporation granted options to purchase 190,011 shares of common stock and 67,896 restricted stock units to certain officers. At March 31, 2014, there were 420,975 shares of common stock available for future grants under the share-based compensation plan.

Stock Options

The Corporation issues stock options to certain officers. Stock options are issued at the current market price of the Corporation's common stock on the date of grant and expire ten years from the date of grant. Beginning in 2013, stock options granted vest ratably over a five-year period. Stock options granted prior to 2013 generally vest ratably over a three-year period.

A summary of activity for the Corporation’s stock options as of and for the three months ended March 31, 2014 is presented below:



	Non-Vested Stock Options Outstanding						Stock Options Outstanding
	Number of Options		Weighted- Average Exercise Price Per Share		Weighted- Average Grant Date Fair Value		Number of Options		Weighted- Average Exercise Price Per Share
Outstanding at January 1, 2014	414,080		$	24.29	$	7.19	1,073,990		$	26.84
Granted	190,011		29.45		9.64		190,011		29.45
Exercised	—		—		—		(50,917	)	25.40
Vested	(117,799	)	24.32		7.21		—		—
Forfeited/expired	(6,900	)	24.57		7.26		(8,287	)	26.56
Outstanding at March 31, 2014	479,392		$	26.32	$	8.16	1,204,797		$	27.32
Exercisable/vested at March 31, 2014							725,405		$	27.98

The weighted-average remaining contractual terms were 6.2 years for all outstanding stock options and 4.3 years for exercisable stock options at March 31, 2014. The intrinsic value of all outstanding in-the-money stock options and exercisable in-the-money stock options was $7.1 million and $4.2 million, respectively, at March 31, 2014. The aggregate intrinsic values of outstanding and exercisable options at March 31, 2014 were calculated based on the closing market price of the Corporation’s common stock on March 31, 2014 of $32.45 per share less the exercise price. Options with intrinsic values less than zero, or “out-of-the-money” options, were not included in the aggregate intrinsic value reported.

At March 31, 2014, unrecognized compensation expense related to stock options totaled $3.6 million and is expected to be recognized over a remaining weighted average period of 4.0 years.

The fair value of the stock options granted during the three months ended March 31, 2014 was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions.



Expected dividend yield	3.00		%
Risk-free interest rate	2.16		%
Expected stock price volatility	42.2		%
Expected life of options – in years	7.0
Weighted average fair value of options granted	$	9.64

Restricted Stock Units

In addition to stock options, the Corporation grants restricted stock performance units and restricted stock service-based units (collectively referred to as restricted stock units) to certain officers. The restricted stock performance units vest based on the Corporation achieving certain performance target levels. The restricted stock performance units are eligible to vest from 0.25x to 1.5x the number of units originally granted depending on which, if any, of the performance target levels are met. However, if the minimum performance target level is not achieved, no shares will become vested or be issued for that respective year’s restricted stock performance units. The restricted stock service-based units vest upon satisfaction of a service condition. Upon achievement of the performance target level and/or satisfaction of a service condition, if applicable, the restricted stock units are converted into shares of the Corporation’s common stock on a one-to-one basis. Compensation expense related to restricted stock units is recognized over the expected requisite performance or service period, as applicable.

A summary of the activity for restricted stock units as of and for the three months ended March 31, 2014 is presented below:



	Number of Units		Weighted- Average Grant Date Fair Value Per Unit
Outstanding at January 1, 2014	188,532		$	21.49
Granted	67,896		27.48
Converted into shares of common stock	(50,267	)	19.13
Forfeited/expired	(1,278	)	23.76
Outstanding at March 31, 2014	204,883		$	24.04

At March 31, 2014, unrecognized compensation expense related to restricted stock unit awards totaled $3.5 million and is expected to be recognized over a remaining weighted average period of 2.9 years.